Endocytic uptake of low density lipoproteins by cells generates unesterified cholesterol in lysosomes. This lysosomal pool of cholesterol remains metabolically inert and does not initiate homeostatic responses, until it has been delivered to other cellular organelles. The endocytic pathway is complex consisting of various organelles including early and late endosomes and lysosomes, as well as traffic flow that may be bidirectional. The metabolic significance and mechanisms of cholesterol trafficking through the endocytic pathway have begun to be revealed through the study of Niemann-Pick C (NP-C)(1) disease, an inherited metabolic disorder manifesting extensive sequestration and accumulation of LDL cholesterol in lysosomes resulting from a defect in the translocation of this sterol pool to other cellular membranes. The recognition of this genetically induced sterol-trafficking defect introduced the concept of specific protein-mediated egress of cholesterol from lysosomes. The gene most commonly mutated in this disorder (NPC1) was recently cloned and its sequence predicts a unique multiple membrane spanning protein of 1278 amino acids. The NPC1 protein has proven to be a valuable biological tool in the study of intracellular lipid trafficking. Our studies are designed to obtain knowledge of the controlling factors responsible for membrane traffic of NPC1 protein in normal cells and elucidate the defect in these functions in mutant NPC1 cells. We demonstrated that the NPC1 protein is located in late endosomes and that the clearance of endocytosed 14 C-sucrose as well as cholesterol was defective in NP-C cells and we concluded that general retroendocytic trafficking and mobilization of multiple lysosomal cargo are defective at a late endosomal trafficking step. This concept provided an explanation for the accumulation of multiple lipids in NP-C cells and tissues. Studies on site directed mutagenesis of the NPC1 protein have targeted domains of the protein responsible for its cholesterol transport function. Our studies of living cells, using an NPC1-green fluorescent chimeric protein document an unusual mode of tubular membrane trafficking for the NPC1 endocytic compartment that appears linked to the NPC1 protein and cellular cholesterol content. We characterized the NPC1 compartment with respect to glycolipid content using antibodies to glycolipids and found that cellular cholesterol levels modulate the glycolipid profile of the NPC1 compartment. Based on these results we propose that the NPC1 compartment serves as a sorting station in the endocytic trafficking of both cholesterol and glycolipids. Enriching the cholesterol content of lysosomes recruits the NPC1 protein into endocytic vesicles containing glycolipids. In the presence of elevated cholesterol levels, certain glycolipids are restricted from entering the lysosomal compartment for degradation and are efficiently recycled in NPC1 sorting vesicles to the plasma membrane accompanied by cholesterol leaving the lysosomes. In this regard, it is interesting to note that glycolipids that accumulate in NP-C cells and tissues, such as GM2 are those sorted through the NPC1 compartment while non- accumulating glycolipids such as CTH and GD3 are shown to traffic on to the lysosomes for probable degradation. The specific manner in which the NPC1 protein affects glycolipid trafficking remains to be established. Niemann-Pick C disease can now be envisioned as primarily a vesicular trafficking defect producing a disruption of cellular glycolipid as well as cholesterol trafficking.